Tuesday, February 03, 2009

No Middle Ground

What has struck me in the post election debates is the clear lack of any middle ground between Republican and Democratic law makers. Krugman writes for me:
"You see, this isn’t a brainstorming session — it’s a collision of fundamentally incompatible world views. If one thing is clear from the stimulus debate, it’s that the two parties have utterly different economic doctrines. Democrats believe in something more or less like standard textbook macroeconomics; Republicans believe in a doctrine under which tax cuts are the universal elixir, and government spending is almost always bad.

Obama may be able to get a few Republican Senators to go along with his plan; or he can get a lot of Republican votes by, in effect, becoming a Republican. There is no middle ground."
When you have the new leader of the Republican National Committee believing that, "Not in the history of mankind has the government ever created a job," well what can you say?

And last night, Jim DeMint tried to eliminate virtually all spending form the stimulus bill and instead do this (PDF):
  • Permanently repeal the alternative minimum tax once and for all;
  • Permanently keep the capital gains and dividends taxes at 15 percent;
  • Permanently kill the Death Tax for estates under $5 million, and cut the tax rate to 15 percent for those above;
  • Permanently extend the $1,000-per-child tax credit;
  • Permanently repeal the marriage tax penalty;
  • Permanently simplify itemized deductions to include only home mortgage
  • interest and charitable contributions.
  • Lower top marginal income rates – the one paid by most of the small businesses that create new jobs – from 35 percent to 25 percent.
  • Simplify the tax code to include only two other brackets, 15 and 10 percent.
  • Lower corporate tax rate as well, from 35 percent to 25 percent.
He claims doing this will create 18 million jobs in 10 years - which isn't even very good! The US economy needs to add 1.6 million jobs a year just to keep up with a growing work force, and his would be 1.8. But that doesn't matter because DeMint's bill would be the worse possible bill to pass. The entire point of a stimulus is for the Government to spend money because the private sector has stopped, and because the Government still has the power to borrow. If you want a wonkish paper about what does and doesn't work, check out this PDF from economy.com. The short version is this table on the right, where the number is the dollar result of $1 spent. So the DeMint amendment is utterly backwards from what works, yet he really believes that his way is best.

But here is the rub, in the senate, only 4 Republicans voted No on this amendment. Four. Out of 40 voting (Gregg (NH) didn't vote because he is becoming the Secretary of Commerce).

So if there is a middle ground it is in those four: Collins (ME), Snowe (ME), Specter (PA), and Voinovich (OH). And the house is another story, with their famous Zero vote last week.

There is not much to work with here is there?

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